Here's Why Tesla's In-House Body Shops Are a Big Deal

Tesla Inc. (TSLA) has quietly been rolling out its own body shops - and that has big implications for the firm's ability to scale into a mainstream automaker.

On the surface, it might not seem like having company-owned body shops is a big deal. But in Tesla's case, being able to repair body damage is a crucial piece of the transition from niche exotic car maker to a manufacturer that can compete with its bigger, more established peers.

Why are body shops such a big deal? It has a lot to do with the fact that, according to USA Today, the Tesla Model S is the most expensive car model to insure.

The reason for those high insurance bills is actually something pretty mundane: Body damage is incredibly expensive to repair.

A fender-bender can cost five-figures, a number driven by the cars' aluminum construction, limited manufacturer-approved shops, and parts scarcity. (Tesla isn't the only carmaker that's seeing higher repair costs due to aluminum construction - Ford's immensely popular F-150 is another example of a model seeing pricier repair bills than steel cars.)

At the same time, Tesla body repairs have been notorious for taking longer than the norm (another factor in the high cost of repairs).

Because car insurance is one of the biggest direct costs of vehicle ownership, it makes sense for Tesla to pay close attention to insurance rates customers are paying.

And while higher insurance rates may be expected for a high-cost sedan like the Model S, they're not acceptable for a mainstream vehicle like the Model 3.

At Tesla's annual meeting back in June, Elon Musk revealed an innovative solution to the body shop problem: Tesla would operate its own body shops to keep costs and turnaround times low.

Months later, Tesla has opened up or is about to open up company-owned collision repair centers in nine different cities across the country.

Musk said earlier this month that Tesla plans on bringing most collision repairs in-house. And he pointed to the firm's ability to specialize in just three car models as a reason why Tesla service centers should be able to turn around body repairs faster than outside repair shops.

Outside repair shops are jack of all trades, which means supporting 1000's of makes & models. Tesla collision repair specializes in three. Having all parts in stock & not waiting for insurance approval also make a world of difference.

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